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Netflix Signs Exclusive Deal With Dreamworks
tekgoblin writes "Netflix has signed an exclusive deal with Dreamworks Animation which will allow them to stream content from the studio to Netflix. The deal will allow Netflix to stream content from Dreamworks, which previously supplied content to HBO. The contract was negotiated at approximately $30 million per Dreamworks film title."
$30 mil per movie title!
That just seems insanely expensive to me.
Except I've seen already seen everything Dreamworks Animation has ever produced.
for Dreamworks to realize that Netflix is making more than $30 million per movie and still wants more?
This is a good deal for Netflix and a bad one for Dreamworks.
Does Dreamworks have that much stuff? I look at the Netflix top 100 and only 6 of the movies are streaming. Netflix appears to be circling the drain to me.
http://www.netflix.com/Top100?lnkctr=mhT100
Netflix is pioneering the new TV landscape. This nerd, for one, wants to hear news about them.
Dreamworks! The poor man's Pixar!
So Dreamworks has produced a little over 100 titles, so that would be a 3 billion dollar deal to get a tiny sliver of the movies they're about to lose with the Stars deal back. That is not sustainable by any measure. For comparison, with the DVD rental business the Disks would have cost somewhere on the order of $2 million. Back when the Streaming was just a sideshow for the disk rental business this didn't matter, but now that the company is split in two it's clear just how badly Netflix is screwed. The studios don't like it, and they ultimately have control over the business thanks to the fact that internet streaming to one household is considered "broadcasting".
It doesn't even matter if this is the future of movie rentals. Studios have shown time and time again that they'll prefer to kill off any new and disruptive technologies instead of trying to profit off of them. They had to be dragged kicking and screaming by court rulings into the VHS and DVD era, and they're not going to go quietly into the streaming era either. Not that they'll have to anyway. They learned their lesson the first time and bought all of the congressmen and FCC executives they need to prevent them from ever having to face inevitable change anyway. Can you imagine legislation that would reclassify streaming in a sane manner from this congress or FCC? The thought is ludicrous.
I read the internet for the articles.
This is probably a 4 year contract.
25 million subscribers, $8 per month, 48 months = $9.6 billion in revenue over the period.
At $30 million a pop, thats is less than 1/3rd of 1% of their revenue per movie.
"His name was James Damore."
...not after.
If Netflix had been on a run of announcing a half-dozen studio deals for streaming, they could have gotten away with the price hikes and the Qwikster split.
As it stands now, especially with the sunset of the Starz deal, Netflix streaming is of marginal value. Most of the movie content is lame and the TV content is even hit or miss -- all of Mad Men and Lost, but I gotta get DVDs for Barney Miller, a show off the air for 30 years with a cast that's half dead and no complicated licensing issues like music?
I'm just not convinced that Netflix has the market muscle, cash, talent, connections or relationships with studios to negotiate streaming deals in the face of studio greed.
Due to Netflix's recent blunders, they aren't growing as fast as they forecasted and are at risk of losing streaming customers. (I dropped my DVD account after the rate hikes and then dropped my streaming account since it wasn't very useful as a standalone service.) On top of all this, Netflix couldn't renew their contract with Starz, which is going to cause their streaming selection to be even more lame by February. If Netflix hadn't signed something of worth, more streaming customers were going to leave.
This does set an interesting precedent though for their future negotiations. Will all other movie studios consider their new releases to be worth $30 million each? Don't see how Netflix could sustain that.
According to the article, no streaming content from this deal until 2013. Maybe I'll reactivate my account sometime around then but in all likelihood, I'll have found a much better alternative by then.
Do you seriously think this article is going to have a significant effect on Netflix at all? Positive or negative? I imagine most people have already made up their minds about Netflix and those that haven't might want to know that Netflix is actually doing something to make their product more enticing. If the post was entirely one long "SQUEE" of jubilation over the wonder that is the Netflix experience, extolling the corporate virtues and bashing anyone who opposed them, then maybe you would have a point. As it is, this is a potential coup for a major company attempting to shift how we view video programming further toward an online streaming experience, which is to say 'News for Nerds, Stuff that Matters'.
Rather than visiting the submitter's own web site where they just re-hash what they already got from GigaOm, how about just going to the source?
http://gigaom.com/video/netflix-steals-dreamworks-from-hbo/
And there's people like me. I'm hanging on a little while longer just to see what happens. Right now I'm scrapping the bottom of the barrel on my Instant queue. In the next few weeks I'll probably quit or suspend my Instant service and go disc only.
Hollywood is trying to kill Netflix as quickly as they can. Sometimes I think they would prefer us all to just use torrents.
The two rules for success are:
1) Never tell them everything you know.
I don't get it. Netflix drops Starz over 200-300mil/year but signs Dreamworks at 30 mil per movie? I'm sure Starz delivers more than 10 movies in a year. Do Netflix execs really think their audience will prefer cartoons over serious content?
Only 4% left, but a bunch of other people switched to less expensive plans and as a result, Netflix is getting less revenue from them. On top of that, the move has been a God send to Blockbuster and a few of the other services which would otherwise have had a really hard time getting the initial subscribers to get going.
It pioneered how networks, shows, actors, writers and workers don't get paid a single dime.
It might work in the short term for a small number of viewers, but unfortunately it's not a viable plan in the long term for all viewers.
Yet ppl are ditching torrents for Hulu and Netflix.
BFD.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
You don't expand a thing like Netflix worldwide by letting all the middle men in control of someone else's works. I hope Netflix are smart and signing world-wide deals, not only USA-only rights. Maybe that's why they went to Dreamworks directly, to bypass all the layers of middle men?
Starz dropped Netflix. They wanted Netflix to charge an additional fee to get Starz content, so that their label would remain "exclusive." Netflix said no
That's all it is. Netflix is betting that they've locked up exclusive rights to some blockbuster (no pun intended) titles for the next few years. Do they think they'll make money on the specific Dreamworks titles they've licensed? Nope. But if it works out that those titles become "must-see" titles, it'll bring subscribers in. And then hopefully they'll have some strategy in place to retain those subscribers. It's no different than a department store advertising an item at a loss in order to get people into the store. Or a network buying a sports package (example: Fox taking the NFC football contract in the early-mid 90's) knowing that while they may not make money on the games, it'll be a positive benefit for the network overall (promoting their network during games, games as a lead-in to other programming, etc.)
Pretty damn easy to 'pioneer' that stuff when you have zero cost because you are freeloading off the people who actually do the work. Oddly enough, it appears that most stolen and counterfeit items are cheaper than legally obtained things. I guess all the thieves and counterfeiters are also 'pioneers' in your mind too?
Sure, they can raise their prices if they want netflix to die and no longer be a revenue stream. If they don't want money anymore then that's a great idea.
Dreamworks must realize that for netflix to be a viable option then they need to allow for netflix to pay their competitors as well. Netflix can't survive as a Dreamworks-only outfit; So if Dreamworks raises their fees and netflix continues as a client then Dreamworks' competitors will start to fall off and so will customers. Then netflix will die and Dreamworks won't get money from them.
Another startup may take their place but the same thing will happen again, and customers will tire of constantly switching to new services to pick up the catalog they want, and then the whole streaming thing will be dead. What may happen is that studios will start their own services to supply the customer directly, and then it will be up to generic hardware providers (media streaming TVs, roku, etc) to be compatible with their services directly. But that probably won't work since customers would rather pay a flat fee than subscribe to multiple distributors each at their own rate.
Twinstiq, game news
The problem is that there is a decision point coming. Today, and for the foreseeable future, the US Internet connection system is a star configuration whereby a "neighborhood" is served by a node. This node is connected to the Internet at large. The pipe to the node is as big as practically possible at this point given the surrounding infrastructure.
Unfortunately, that node serves as many as 1,000 homes and has a capacity between 1 and 3 GB/sec. This works fine when out of 1,000 homes most are surfing the web, reading email, or downloading music. It work fine when 50 people are using some kind of streaming video service.
It doesn't work at all when all 1,000 homes are using some kind of streaming video service. It doesn't work if multiple terminals in homes are using streaming video services.
DOCSIS 3.0 isn't going to fix this problem - if anything it will make it worse. Either drastically reducing the number of homes connected to a node or drastically changing the nature of each node will work. The last time we did this it took the US about 15 years to do it. I would expect the same sort of implementation time.
Netflix has a lifespan of maybe 3 years. Two years is probably more realistic.
That's what I mean. Why did Netflix say no? With Starz providing thousands of titles, Netflix could eat that fee and still a bargin compared to the $30/mil per movie tag associated with this Dreamworks deal. Reviewing my viewing habits on Netflix instant shows about 75% is Starz content, 20% is kids shows for my two-year-old, and the other 5% is non-Starz traditional content. So it looks like the only winner after Netflix drops Starz is my kid. Did Netflix really need to pay to boost that market?
And radio pioneered the solution to the Netflix inefficiency problem: broadcast. Before 1920, Netflix sucked as much as it does today, but then they fixed the upstream inefficiency problem.
And many people accepted that, though it did have one downside which took about 56 years to really deal with. VHS pioneered the solution to not everyone wanting to watch the same broadcast at the same time: time-shifting. So while people were flaming Netflix in 1975 nearly as much as they had been in 1919, things suddenly settled down and Netflix got good again.
Then in the early 21st century, Netflix pioneered a return to all of 1919's problems. What's fascinating, is that they've managed to build an image of coolness and modernity, instead of as luddites or evolutionary throwbacks.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
That's what I mean. Why did Netflix say no?
Because once they open the door everyone else will want their service to have a "premium" too, their service will fragment and Netflix will be only a platform for selling various other subscriptions? I know it happens for special interest TV but I can very well understand Netflix saying that we can negotiate price, but you don't get to say how we collect money from our customers. In fact, that might be the whole principle of the decision.
Live today, because you never know what tomorrow brings
Well you have something of a point, but there is one real and compelling perk being added - game rentals.
However, I don't know the situation is as dire as you make it sound.
On the queue, I'm not quite sure what you mean since streaming was always a separate queue from the DVD queue anyway. If you mean, you'll not see the streaming option from the DVD queue for titles that you can watch now - I'm not sure that will be gone, they could keep links in place to move between the two sites.
The separate lists and ratings is rather awful though.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
According to the article, no streaming content from this deal until 2013. Maybe I'll reactivate my account sometime around then but in all likelihood, I'll have found a much better alternative by then.
What makes you think that, at all? What ray of hope is there anywhere that something better will come along?
One possibility was pay per stream, which is essentially what iTunes rentals was. Dead.
Another model is Hulu. Oh awesome, I get to pay more than Netflix for an order of magnitude less content that includes commercials.
Or perhaps you prefer a total balkanization of content? Like the NFL streaming you can buy on the PS3 - for $100...
Like it or not, Netflix has the only streaming model that is really reasonably priced and commercial free with a pretty wide range of content. If Netflix falls you can look forward to paying $100 for the same amount of content, if you are lucky... By not buying into Netflix now, you are basically helping to seal the fate of the only solution that is close to good. When you come back in 2013 and find NOTHING viable apart from torrents, well don't come crying to Slashdot!
My thought is that the death of DVD's and physical rentals is greatly exaggerated as long as the streaming scene is so horrific and fragmented. I will continue to support Netflix because they are the only content neutral providers that I like the approach of.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
All about Dreamworks...
Bow-ties are cool.
I think it was pretty obvious that Netflix and Redbox were doomed once you start to see ads like "rent it 28 days before (insert competitor name here)!"
Right, can't underestimate the importance of that kind of value. By the time the competitor gets the movie, the world could be overrun by zombies.
Bow-ties are cool.
Exactly. Exclusive deals are bad for consumers because they eliminate competition. Netflix surely could have negotiated a lower fee for a non-exclusive deal. Since the $30 million per film will ultimately be passed along as higher fees to the Netflix subscribers in some way, subscribers are paying extra for something (exclusivity) that does not benefit them at all -- it benefit's Netflix, the company, in a strategic way. A non-exclusive deal would have been just as beneficial to Netflix subscribers, and would have cost them less, and would have allowed people that don't use Netflix to access the content as well. This deal is worse than a non-exclusive deal for all consumers, whether they subscribe to Netflix or not. Exclusivity is only good for Netfix, the corporation, and it's shareholders (if they didn't overpay).
I don't get it. Netflix drops Starz over 200-300mil/year but signs Dreamworks at 30 mil per movie? I'm sure Starz delivers more than 10 movies in a year. Do Netflix execs really think their audience will prefer cartoons over serious content?
The only thing decent Starz has ever *produced* was Spartacus: Blood and Sand, IMO. Other than that, they're a Disney outlet. That's really what will hurt them, not so much 'Starz'. Even at that, Disney doesn't tend to put much out via Starz of their 'good' content. There have been maybe 3? Disney flicks on Netflix in the last few years, so it's not a big loss. It's more consumer shock than anything, as most people go "OMG NOT STARZZZZ" when they really don't understand how little content that really is.
And yes, I think DreamWorks is a much bigger name, for movies. Starz doesn't make movies. They shill them.
Hopefully, this will end the argument that the damages for copyright infringement are just $.99 for sharing a song or $1.99 for sharing a movie. Distribution rights are much, much more expensive.
> only streaming movel that is really reasonably priced I think Crunchyroll's $6/mo for streaming subtitled anime a week or so after broadcast in Japan to be reasonable. Less content than NF, but lots of stuff I really want.
I agree about the dearth of physical rental stores. but I was more talking in that part about getting physical rentals at all - I don't miss the local rental places whatsoever because I can still rent physical discs through Nteflix.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Ok, I agree that's pretty reasonably priced (I've used it before myself) but very narrow in scope...
Because of content provider issues, I can't see Crunchyroll expanding to be a general video source if Netflix fails.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Well I don't know the details of the proposal, but Xphile said that "They wanted Netflix to charge an additional fee"; that implies that Netflix couldn't simply eat the cost.
It's official. Most of you are morons.
Actually, I'd prefer "a total balkanization of content" - I see no need to pay for a wide range of content when I'm not interested in most of it. MLB's streaming service, for example, is actually pretty nice, and while you might call it expensive, I consider it a pretty good deal to be able to watch any game I want at any time I want, with commentary from either team's announcers. We can both agree that it is a complete waste of money if you're not a baseball fan. American football, on the other hand, holds zero interest for me, nor does basketball. A package service that includes all three is not a deal I'd be interested in; if you're a football fan that hates baseball, why would you prefer a package that includes all three over just paying for football? For that matter, if you're a fan of pro football vs college ball (or vice-versa) why would you want to pay for both? Or even down to the level of college conferences or teams?
Movies and are much the same. There are some studios that simply do not turn out anything I'm interested in. There are some I'm opposed to giving money to (sony/universal). Why shouldn't each studio run their own streaming service, and let people pick and choose which they want?
In short, a wide range of content means I'm going to be paying for a lot of stuff I don't want -- the same complaint most people have about cable/satellite tv packages. You're advocating for the same approach to streaming media that people already do not like.
I know Starz entirely as "the channel that brought Torchwood to America for a season". That was pretty decent (though it started off stronger than it ended), and it was in no way Disney.